Why Do Company’s Really Match 401k Contributions?

The average person, if they even have a retirement account, have a 401k which is investing in mutual funds. Don’t be average. Take responsibility and have some control 🙂 – Josh

There’s No Such Thing As Free Money

Posted on: Tuesday, January 31, 2012|Written by: Robert Kiyosaki

Get a Financial Education and Stop Thinking Like an Employee

Years ago I had a conversation with a young man about 401(k)s. “I have a question for you,” he said. “I’ve read that you say 401(k)s are the worst investments, but I don’t understand why you say that.”

“What is it that you don’t understand?” I asked.

“Well,” said the young man. “Most employers match your contribution. For instance, my employer matches up to four percent of my salary. Isn’t that a hundred percent return? Why is that a bad investment?”

“It’s a bad investment,” I said, “because it’s your money to begin with.”

He looked puzzled and perplexed.

“Listen,” I said, “if it weren’t for 401(k)s, your employer would have to pay you that money as part of your salary. As it is, they still pay it, but only if you give up four percent of your existing salary in to a retirement account where you have no control. And if you don’t, well the employer comes out ahead. It’s your money, but they’re in control.”

Thinking like an employee

The young man still didn’t look convinced, but I could tell he was thinking hard about it. The reason this young man and many others don’t understand my reasoning is that they only think like employees. As an employer, I know that if it weren’t for 401(k)s, I’d have to pay that money to employees in their salary in order to be competitive.

For me, as an employer, a 401(k) is an advantage because I don’t have to pay the money unless an employee opts in, and if they leave my company too early, I don’t have to pay because they aren’t vested.

A recent study confirms what I’m saying and should help those of you who still find this logic confusing or not convincing.

A 401(k) steals your money

A recent study confirms what I’m saying and should help those of you who still find this logic confusing or not convincing. According to Steven Gandel, a study issued by the Center for Retirement Research indicates that, “All else being equal…workers at companies that contributed to their employees’ 401(k) accounts tended to have lower salaries than those at companies that gave no retirement contribution…In fact, for many employees, the salary dip was roughly equal to the size of their employer’s potential contribution.”

Translation, companies that don’t offer 401(k)s must pay a higher salary to compete with companies that do. Those company’s employees simply get their money as part of their salary rather than having to match it and save it in a tax-deferred retirement plan where they have no control and have high fees.

No financial intelligence? Stick with the 401(k)

Control is an important aspect of investing. As I mentioned, with a 401(k), you have no control over your investments as you generally invest in funds and indexes controlled by brokers, who are controlled by bankers, who invest in companies that are controlled by boards — all of which you have no control over.

If you want to be rich, you must have a financial education and control over your money and your investments. This is why I like to invest in my own business, purchase real estate and create products. I have a lot of control over those investments. Generally a good matrix is the more control you have, the higher your potential return. The less control you have, the lower your potential return.

Of course, it takes high financial intelligence to invest in things where you have control because you have to make a lot of important decisions. This is why being forced into a 401(k) probably isn’t a bad thing for most people. This is because most people have little-to-no financial education and wouldn’t know what to do with the extra money other than save it or spend it.

But I expect the average Rich Dad reader to be head and shoulders above the average person in terms of financial intelligence. The reality is that if you’re investing in a 401(k), you’re not making a return on your employer’s match. You’re simply getting what is owed you by your employer.

For some, this might be the first time you’ve ever thought of this. For others, I’m probably preaching to the choir.

Some questions for the Rich Dad community

If you’ve avoided the 401(k) trap, what ways are you using that money to build your wealth outside of a 401(k)?

How Your Taxes Can Help Build Your Wealth

Taxes are most people’s biggest expense. Therefore reducing that amount means more money immediately available to invest. The tax law is a series of stimulus packages for real estate investors and business owners.“- 

How Your Taxes Can Help Build Your Wealth
Most people view taxes as a drain on their wealth. If it weren’t for their taxes, they would have more money in their pocket, would finally be able to get ahead and could start investing.

I look at taxes very differently. I look at taxes as a way to increase cash flow. The tax law provides tons of opportunity to reduce your taxes. When you reduce your taxes, you increase your cash flow (often immediately) which can be used to increase your wealth.

Reducing your taxes goes hand-in-hand with your wealth strategy. For most people, taxes are their single biggest expense. This means that reducing their taxes results in instantly increasing the amount they have available to invest.

The Government Wants You to Reduce Your Taxes
The tax law is a series of stimulus packages for real estate investors and business owners. This is true in all developed countries.

The government wants to provide jobs and housing. To encourage others to do this for them, the government provides tremendous tax benefits to those who provide jobs (business owners) and those who provide housing (real estate investors).

Your Tax Strategy is Part of Your Wealth Strategy
Once you understand what the government wants you to do in order to reduce your taxes, you can use this information in your wealth strategy to invest in assets that not only fit with your wealth goals but also produce tax savings.

This is a powerful formula and one that can be used over and over and over again because many of the tax benefits for entrepreneurs and real estate investors produce annual tax savings.

Then, as your wealth grows, so do the opportunities for tax savings, which means not only does the cycle continue every year, it grows every year as well so your tax savings are more, your increase in cash flow is more and your wealth increases even more.

Do you see why I am so passionate about taxes? Taxes are a tremendous tool to build your wealth.

Tom Wheelwright

How To Legally Reduce Your Taxes

If You Want to Change Your Tax, Change Your Facts
I am regularly asked how someone can reduce their taxes – legally, of course.

My answer: Change your facts

One of the most powerful ways to make the tax rules work for you is to change your facts. This concept applies in most developed countries because the tax law is written to favor specific facts.

Do you know someone who is always sharing the write-off of their most recent meal (trip, vehicle, cell phone, gadget, etc.)? Do you wonder if what they are doing is cheating or legal?

With the right set of facts, any of those items can be legal tax deductions.

That’s why when I meet with a new client, I want to know their facts first. Then, I can determine how to change their facts to reduce their tax.

What are these facts?
The facts I’m referring to here are usually surrounding where your money comes from and where it goes.

– Do you own a business?
– Do you own investment real estate?
– Are you an employee?
– Are you self-employed?
– How much time do you spend in your business?
– How much time do you spend in your investing?
– What is your role in your business?
– What is your role in your investing?
– What investments do you have?
– What expenses do you pay personally?
– What expenses are paid by your business or investing activity?

What is deductible for one person may not be deductible for another person. This is because one person’s facts can support a particular deduction whereas another person’s may not.

If you don’t like your tax, change your facts
A few years ago, a client asked me if he could deduct his travel to a particular state. He and his family enjoyed spending time and traveling there frequently. At that time, he didn’t have a business reason to travel to that state and his business was not set up to conduct business in that particular area.

I went over the specific rules with my client that covered what he needed to do in order to meet the requirements to deduct the travel in his business. I also shared with him how he could deduct the travel expenses for his spouse and children.

A few months later, my client tells me about a very profitable deal he now has in the state and he provided me with all of the documentation we discussed to support his deductions.

My client jumped in and changed his facts. It led to increasing his deductions, reducing his taxes and making more money! In order to meet the rules, he had to conduct legitimate business in the state. He did and he was very successful at it.

How can you change your facts?
Any time you have cash come in or go out, there’s an opportunity to change your facts.

Should you receive the income personally or should your business receive the income?

Are your investments helping your tax situation or should you explore new investment strategies?

Are your expenses personal or do they meet the rules specific to your situation that make them deductible?

Are you willing to change your facts?
Discuss your facts with your tax advisor and ask how changing your facts could change your tax. Then, be ready to take action.
Tom Wheelwright

Essential Qualities of an Entrepreneur: Brand

Essential Qualities of an Entrepreneur: Brand

Posted on: Tuesday, December 20, 2011|Written by: Robert Kiyosaki

In some ways, it’s fitting that I sit down to write about a brand as an essential quality of an entrepreneur this morning. All across the headlines are blazing the news of the death of Kim Jong Il at the age of 70 years old.

Interesting among the more standard news stories about the Kim’s reign — and the devastation it caused his country and his people — is an article in The Wall Street Journal on the mythic nature of Kim created by his propaganda machine.

According to the article, there are two filters through which Kim was viewed.

To his people, Kim is a “peerless leader, master of all knowledge and gifted athlete”— or at least gives the appearance as so — with huge banners and paintings showing his likeness all over the country of North Korea and carefully constructed photo ops and news stories painting him as such. Newscasters, announcing his death on television, we’re in tears as they reported the news.

To the world, Kim is a brutal dictator with a bizarre love of gray jumpsuits. He oversaw a country that declined from a communist regime over decades into one of the poorest and most brutal dictatorships in the world, imprisoning millions, killing untold numbers of his own people, and pushing scores of North Koreans into abject poverty and starvation.

But these are all perceptions, as no one really “knew” Kim. Very few world leaders actually met with him, and his own people only heard his voice once, in 1992, on a broadcast where he said, “Glory to the people’s heroic military.”

Eventually, however, as it does for everyone, the truth gets out. And that brings me to branding.

Over the last couple weeks, I’ve briefly shared some thoughts on the essential qualities of an entrepreneur, based out of the book, Midas Touch, by Donald Trump and me.

So far, I’ve written on strength of character and F.O.C.U.S. This week, I want to talk about the importance of a brand.

The Importance of Brand for An Entrepreneur

Many people think a brand is what you make, which is not true. What you make is simply a commodity. A brand is what communicates who you are as a person or a company and informs what you make.

A brand is different than a commodity. For instance, Coca-cola is a brand. Store-“brand” soda is a commodity — not a really a brand. Nobody collects Safeway-brand cola merchandise — and no one builds museums to celebrate the history of Kroger soda. They do for Coke though, because it is a brand — and one that people love.

A brand is important for an entrepreneur because it helps people instantly know what you stand for. For me, my brand is taking complex financial information and making it easy and fun to learn. My company represents that brand, and people trust me and my brand. My brand is authentic.

And that’s why today’s news is so interesting, because it communicates a universal truth about branding.

Kim Jong Il had a brand (we all do to a greater or lesser degree, and many refer to is as a reputation). To us, it’s clear that his brand was a brutal dictator. But we don’t really know, yet, what his brand was in his own country. He worked hard to pass himself off as a great man and leader to be revered and who cared for his people and country against a world out to get them. But I’ll wager that most North Koreans don’t buy that brand. Why? Because the reality of their lives as they starve and face persecution don’t measure up to that brand.

His brand is not authentic. It is a veneer held together by fear. Now that he’s dead, it will most likely unravel. News sources are indicating as much, with most world leaders predicting a huge and possibly violent power struggle on the horizon.

That is an important lesson in branding — your brand must be authentic, or you’ll eventually be found out. You can be successful by some measure with a brand that is not authentic, but eventually that lie will be found out and what you’ve built will come crashing down. Rather than shoot for a period of success by creating a false brand, a true entrepreneur seeks to build a legacy by creating a true brand.

And a true brand comes from doing what you love and building a great company that desires to share that love.

For me, I love to see people’s lives changed by financial education, just as my life was.

My company exists for that sole reason, and it’s reflected in my brand. I don’t need a propaganda machine to communicate that. My actions and the products of my company represent that, my employees live that, and my customers attest to that.

If you plan on being an entrepreneur, as I hope many of you are, I would challenge you to begin the process of self-discovery for both you and your company. Who are you, really? What are you passionate about? What defines you and your company?

Once you have discovered the answers to those questions, build your company around them and live them truly. Only then will you have a true and authentic brand, and only then will people look and you and say, “Yes, I know and love that brand.”

Don’t think you can fake it. Because you can’t. Eventually, everyone’s true brand comes out—just as it will for Kim Jong Il in North Korea.

FOCUS – “follow one course until successful!”

This is one of the greatest reads in a while! This post is a short summary of one of the chapter’s covered in Robert Kiyosaki’s and Donald Trump’s latest book, “Midas Touch.” I strongly recommend you pick up the book if you want to be a business owner or entrepreneur on any level. I love what he has to say about the information age that we all live in! – Joshua Gamen

————————————————–

Essential Qualities of an Entrepreneur: F.O.C.U.S.

I recently released my newest book, The Midas Touch: Why Some Entrepreneurs Get Rich and Others Don’t, with my good friend, Donald Trump. This is a book on entrepreneurship for entrepreneurs—something both Donald and I are extremely passionate about.

The reason Donald and I wrote this book is because we’ve learned the hard way that there are five, essential qualities entrepreneurs need to have in order to succeed. These qualities aren’t a guarantee for success, but not having them is a guarantee for failure. And we want you to succeed.

So, over the next few weeks, I’ll briefly share some thoughts on each quality. For more on each quality, I encourage you to purchase a copy of Midas Touch.

Last week, I wrote on the number one essential quality of an entrepreneur—strength of character. This week, I’m writing on essential quality #2—F.O.C.U.S.

Today, we live in a world of instant gratification.

When I was a kid, we had only a handful of channels on the television. If you wanted to know something, you had to go to the library and spend some time to look it up. If you wanted to know how someone was doing, you had to write them a letter – or if you had the money, call them long distance. And if you needed directions, you had to stop at a gas station to ask.

The world has changed since then. Now, there are thousands of channels on TV and most people can’t stay on one for more than a few minutes. If you want to know something, you look it up on Wikipedia in seconds through your computer or phone. If you want to know how all your friends are doing, you spend a few minutes on Facebook. If you want to talk to them, you text them – or six or seven of them – right away and all day long. And if you want directions, you hit a little map button on your phone.

This instant gratification is a result of living in the Information Age, which is a double-edged sword because living in the Information Age gives more people more opportunity than ever in history to become rich, but it also makes it harder to become rich because we’re all suffering from ADD.

Today, we live in a world that finds it hard to focus.

Because there is so much information at our finger tips, our minds, especially young people’s minds, are conditioned to move from one stimuli to the next. It is rare these days to focus on one thing for a sustained period of time.

If you want to be a successful entrepreneur, however, you have to learn to F.O.C.U.S. Simply, this means Following One Course of action Until Successful. This takes time and effort – and, as we talked about last week, strength of character.

For many entrepreneurs, it takes years to master a business sector or asset class. It takes the dedication of studying hard, building your financial education, cultivating relationships, and learning from mistakes. And during those years, you’re looking at many long days, putting in lots of hours for little-to-no pay.

The difference between wannabe entrepreneurs and successful ones = F.O.C.U.S.

At the end of the day, the difference between a successful entrepreneur and a wannabe entrepreneur is F.O.C.U.S. Many wannabe entrepreneurs are looking to get rich quick. So, when one avenue doesn’t pan out, they move onto the next. The problem is they are never successful because they never put in the time and effort required to be so.

Rich Dad has never been about getting rich quick.

We’ve always been about a lifelong journey of financial education.

No one is born an entrepreneur. You become an entrepreneur over many years of learning, hard work, and F.O.C.U.S.

 

Written by: Robert “Rich Dad” Kiyosaki

Essential Qualities of an Entrepreneur: Strength of Character

A couple weeks ago, I wrote about something hopeful I see in America, the rise of young people interested in entrepreneurship (“There’s Hope Yet”). More than ever, the upcoming generation wants to start businesses and pursue their passions by starting companies that will not only take care of them and their family, but also benefit society as a whole. I applaud this.

I recently released my newest book, The Midas Touch: Why Some Entrepreneurs Get Rich and Others Don’t, with my good friend, Donald Trump. This is a book on entrepreneurship for entrepreneurs—something both Donald and I are extremely passionate about.

The reason Donald and I wrote this book is because we’ve learned the hard way that there are five, essential qualities entrepreneurs need to have in order to succeed. These qualities aren’t a guarantee for success, but not having them is a guarantee for failure. And we want you to succeed.

So, over the next few weeks, I’ll briefly share some thoughts on each quality. For more on each quality, I encourage you to purchase a copy of Midas Touch.

Strength of Character

As a young man, I started a successful Velcro wallet business. This was in the early 1980’s and MTV was just starting to take off. My partners and I had the foresight to take advantage of the wave of rock bands coming out of MTV, and we licensed band names and logos to place on our wallets.

For a while, business boomed. We had thousands of distributors around the world shipping our wallets for us, and we had millions in sales. The problem is that we didn’t really know what we were doing. As a result, many of our sales partners were 120 or more days late on paying us or had skipped out entirely. Because of this, we couldn’t pay our vendors, didn’t have the materials to continue production, and were in danger of not paying our employees and our taxes. We were in a cash crunch.

I’ll never forget sitting down for lunch with my rich dad to go over my financials for the company. Looking over the financial state of my company he said to me, “Your company has financial cancer. You’ve mismanaged a company that could have been successful. You need to look at reality and admit you’re incompetent and that your business is a failure.”

It was a hard word to hear. Up till that point, we tried to hold on, thinking the next big break would come. But it never did, and things were going from bad to worse.

After that conversation, I went back to my partners, and we did the right thing. We liquidated our inventory, paid our employees what was due to them, and set aside enough money to pay our taxes. The company was finished, but at least we weren’t crooks.

That was my first major failure as an entrepreneur. But it wasn’t my last. And if there’s anything I’ve learned after 30+ years as an entrepreneur, it’s that you will fail. The question is not whether you’ll fall; it’s how many times will you stand up?

The #1 essential quality of an entrepreneur is Strength of Character.

In order to succeed, you must first have integrity to do the right thing, and second, have the fortitude to continue moving forward even in the face of failure. Those who lack strength of character quit in the face of failure. Those who have strength of character get stronger in the face of failure by learning and adapting for the next opportunity.

How strong is your character?

I leave you with one of my favorite commercials of all-time.

Written By: Robert Kiyosaki

How to pay less taxes – applicable(and easy) steps

This is from my CPA’s weekly newsletter. EVERYONE needs to be doing these easy things to keep more of the money they make for their own benefit.

Josh

By: Tom Wheelright

Taxes can be a powerful tool to build your wealth. View every day as an opportunity to reduce your taxes.

The general population views taxes as something you deal with once a year. I look at taxes differently. Taxes are a tool that can help you create wealth, and what better way to do this than every single day!

Every day you have opportunities to reduce your taxes.

When you are making money, there is an opportunity to reduce your taxes.

When you are spending money, there is an opportunity to reduce your taxes.

When you have a new investment, there is an opportunity to reduce your taxes.

When you make a new deal for your business, whether it’s with a vendor, a customer or an employee, there is an opportunity to reduce your taxes.

Making it a habit to look at every day as an opportunity to reduce your taxes will create the right habits to actually reduce your taxes.

What did you do today that may reduce your taxes?

– Did you buy breakfast, lunch or dinner?
– Did you drive your vehicle for your business or real estate investing?
– Did you go shopping?
– Did you attend a seminar?
– Did you get an early start on holiday gift buying?
– Did you make an investment today?
– Did you hire a new professional for your team?
– Did you sell an investment?
– Did you make travel plans (even if for the holidays)?
– Did you file (or throw away) receipts?

This is just a small list of what many of us do on a daily basis. All have the opportunity to reduce our taxes.

Make Tax Savings a Daily Habit
It really boils down to focusing on where your money comes from and where it goes.

When you make money, think about how the money will be taxed. Are there better ways to receive your money so it is taxed in more favorable ways?

When you spend money, consider how it can be a legitimate deduction for your business or investing activity. If it can, then be sure to keep the proper receipts and documentation. And, make sure your business or investing activity pays for the expense if you have separate entities for these activities.

Here’s a daily habit I have.

I carry my business credit card and a manila folder with me at all times. Having my business credit card on me makes it very easy to have my business pay for my business expenses.

When I use my business credit card, I write the business purpose and other notes on the receipt. These notes give me the proper documentation to support my expense as a business expense. Then I put the receipt in the folder. The next time I’m in the office, I hand over the receipts to my assistant who scans and files them.

With this habit, my business is properly paying for the expenses and I can easily pull up the documentation to support my expenses at any time. You may notice that this is not a fancy system. But it works, because I do it the same way every time. My receipts don’t get lost, I know exactly what they are for and my tax savings are protected.

Imagine how different this scenario would be if I tried to do the documentation and filing only once a year!

There are many opportunities available to business owners and investors in the tax law to reduce their taxes. Understanding how these rules apply to you will help you create the habits in your daily routine to reduce your taxes.

Get Started Now
As I have been sharing, the government wants you to reduce your taxes! The tax law is a series of stimulus packages for real estate investors and business owners.

Reduce your taxes now!

Tom Wheelwright

Crush it! Passion comes before sales!

By: Joshua Gamen

I saw the movie “The Social Network” this weekend. If you haven’t seen it yet, I recommend it. It is an interesting story and a very well done feature about the story of the creation of Facebook. In watching the movie, the business principal that stood out to me most was that

it’s not about monetizing, it’s about having the best product, then money follows, as was seen with Mark Mark Zuckerberg, the main character and creator of Facebook becoming the youngest self made billionaire ever.

Of the many flaws that have stemmed as a result of our fiat currency system(fiat currency = currency that is not backed by anything of tangible value) as well as our fractional reserve banking system, we have a common factor in our economy of businesses putting sales in front of the product they are contributing. When the Fed pumps monopoly money into the economy, people naturally lose focus on real value, and instead strive to attain as much currency as possible, which they use to then obtain objects of value. The extra step of attaining the currency has created out modern day sales process, and along the way it has given the ultra-rich a vehicle to drive off with our stolen wealth.

I’m not against the idea of money. I believe it is critical for the economy to have a common item to keep trade fluid. My point tho, is that with an over-supply of currency, the focus shifts from creating things of value, to attaining as much currency as possible. The result is less REAL gross domestic product. This doesn’t do anyone any good except for the people trying to gain power.

The beauty of this depression that we are in(technically referred to as a recession – technically referred to as over…) is that with the money supply constricting, it has allowed people to let the smoke clear and start seeing what is real again. When your money is limited, you cannot help but begin to see more clearly what you really want and need. This depression, along with the power of the internet and modern technology, has created a shift from focus on sales to focus on value. It is now more important than ever to be contributing a good product or service. With less currency chasing the same amount of goods and services, the cream is rising up and it is leaving behind the crap! This brings up another great point, “It is never a bad time to start a business unless you’re starting a mediocre(or bad) business.” – (Quote from Gary Vaynerchuk.)

In a boom economy, you can attain currency(sell) on just about and idea or business, as long as you have a strong focus on sales and a good hustle. In a down economy, you CAN thrive, but it is imperative that you are contributing something that gives real value to your consumers.

There are 2 more points I am trying to make with this writing:

1. People – EVERYONE – needs to start thinking of themselves as a business. While I strongly recommend working with people, I strongly oppose working for people.

2. Everyone needs to cash in on their passion! Learn how to live out your passion, and you will have all the money you need, plus control of your own time and destiny. Remember this, skills are cheap, but passion is priceless. Don’t get stressed out thinking about how you will sell, or “monetize” your ideas. Focus on what you are passionate about, then teach, and the people will come to consume what you are providing. People do not want to be sold anymore anyways, they want to be educated. Everyone is disgustingly tired of being “sold” to.

Pick your passion, do it for yourself, and focus on the quality you are delivering as a contribution to your passion. Worthless activities will diminish as a result of doing this, which will increase your purpose, followed by increasing your happiness.